Saturday marks Donald Trump’s 100th day in office, and so far, the stock market is giving him a pretty good grade.

The S&P 500 is up more than 10 per cent since election day on Nov. 8 ( about half those gains have come since his inauguration on Jan. 20), and the Dow Jones Industrial Average has risen approximately 15 per cent.

As the U.S. President’s pro-growth policies fueled the so-called reflation trade, Canadian stocks and other cyclically-oriented markets have gone along for the ride.

The S&P/TSX Composite Index is up nearly six per cent, and after a sharp pullback in the days following the election, the MSCI Emerging Markets Index has climbed 8.5 per cent on the back of a softening U.S. dollar and stronger global growth.

But the dramatic rally, particularly in U.S. stocks, has lost some steam since equity benchmarks hit their most recent all-time highs at the beginning of March, as the market grows more concerned that many of Trump’s promises won’t pan out as hoped.

“The initial reaction was one of euphoria around the idea that animal spirits would be unleashed,” said Kurt Reiman, chief investment strategist at BlackRock Canada. “Over the course of the past 100 days, advancing policy has been much more of a struggle than investors anticipated.”

The President’s 100-day action plan, as set out in his “contract with the American voter,” gets an incomplete grade at best.

It included the repeal and replacement of Obamacare, a restoration of the National Security Act, cleaning up corruption in Washington, and several other lofty goals.

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However, investors are likely more interested in the American Energy and Infrastructure Act, Trump’s promise to renegotiate NAFTA, his expected tough stance on China, and highly-anticipated tax reforms unveiled this week.

An infrastructure proposal is apparently “coming fast,” Trump softened his stance on backing out of NAFTA, he hasn’t labelled China a currency manipulator, and the administration’s tax plan disappointed.

“It was never particularly likely that the Trump administration was going to be able to deliver on the expectations of the market and so it has been proved,” said Michael Hewson, chief market analyst at CMC Markets U.K.

Despite the market’s strength so far in Trump’s term, the prospect for future gains may be muted by uncertainty. It’s simply hard for businesses to invest in their long-term growth when they don’t have clarity about the policy framework.

“To some extent, investors are seeking that sort of clarity,” Reiman said, highlighting the health-care landscape, tax reform, and infrastructure spending. “I think it’s a little early to make these policy shifts reflected in investors’ portfolios.”

Advancing policy has been much more of a struggle than investors anticipated

Despite Trump’s recent wavering, it looks unlikely that NAFTA will be revoked, although the U.S. will continue to take an increasingly protectionist stance.

Angelo Katsoras, a geopolitical analyst at National Bank Financial, noted that opposition to free trade is one of the few things that unites an otherwise deeply divided U.S. electorate.

“In this environment, investors must do more than simply analyze the balance sheets of companies,” he said. “They must also look at any ongoing or potential future tensions with trading partners, since access to foreign markets should no longer be taken for granted.”

The Canadian lumber sector is a perfect example, as tariffs handed down by the U.S. government bring a long-standing dispute back to the surface.

While trade has dominated the headlines in Canada, tax reform is what the U.S. equity market has been waiting for.

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In the immediate wake of the election, high-tax companies in the U.S. performed much better than low-tax companies. But as the as the Affordable Care Act repeal lost momentum, and the Trump administration’s tax plan became less convincing, high-tax companies started to underperform.

Much of the uncertainty stems from divisions within the Republican party, despite the optimism a unified government generates.

The market is focused on how tax reform is going to advance: What will be included, and what won’t.

The White House unveiled its plan this week, with some of the highlights including a reduction in the capital gains tax rate for high earners, and slashing the corporate tax rate to 15 per cent.

Trump reiterated his desire to repatriate approximately US$2.6 trillion in corporate profits being held abroad with a one-time tax rate. Yet it isn’t clear whether this will happen over several years, or all at once.

The rate for this one-time tax on foreign earnings hasn’t been determined, with Treasury Secretary Steven Mnuchin only saying it will be “very competitive.”

“This plan looks rich at first take in terms of the costs in revenues, and fiscal hawks in Congress might not fully buy into the claim that accelerated growth will ‘pay’ for the cut, particularly in a U.S. economy already closing in on the limits of full employment,” said Avery Shenfeld, chief economist at CIBC World Markets.

He believes passing something close to this package will be a challenge and that a lot of negotiation is ahead. It does, however, mark a step towards the corporate tax reductions that have been baked into equity valuations.

The world’s largest economy has demonstrated steady improvement in the past few years, and Trump took office at a time when global growth was accelerating. So it’s hard to say that the Trump administration is responsible for the stock market’s gains.

And with so much left up in the air, it’s simply too early to handicap the outcome of the White House’s policy goals.

So far now, investors would be wise to focus on the economy, not Washington. After all, it’s only 1,284 days until the next U.S. presidential election.